Gold Daily and Silver Weekly Charts - Benny Has a Printing Press - QE3 Begins

Jeff Christian's clients were being carried out on stretchers today as the Fed made it rather clear to any who were still in doubt that they do have a printing press and, by hell's heart, they are going to use it.

The Fed clearly signalled their intent to spend, and gave some indications of their willingness to 'do whatever it takes' in their own Draghi moment.  What will restrain them? The difference is that the US has no Merkel, just Urkel(D).  Or Herman Munster(R).

Remember that in this sort of reserve fiat currency the only limiting factor to their printing is the value of the bonds and the dollar, which is after all a bond of zero coupon and unrestricted duration. Well, unrestricted until there is a default, but that is another matter. And they all do it, sooner or later.

Gustav Klimt, Portrait of Adele Bloch-Bauer

Gold and silver both ran higher along with stocks. The stock market action was interesting if you looked at volume and which sectors were leading, and which ones lagged. Volatility is on Quaaludes.

So what next. Gold has made its 'cup' which I showed intraday. What happens next will determine what we will make of it. We need to see it stick the rim, and then form a decent handle. I will review the technical rules soon if that happens. Remember the retracements.

Blythe Masters had an interesting addition to her CV at JP Morgan which was noted in intraday commentary. As you may recall, Blythe is of special interest to us because she is the Captain of the USS Silver Short Position, currently racing through the North Atlantic at top speed with its running lights off.

I am reading a Berlin Noir novel Prague Fatale by Philip Kerr, a remarkable writer who ornaments his well structured and researched story with an amazing, almost exuberant display of wide learning and broad cultural erudition.  I am curious to know how he accumulated such an array of knowledge. He weaves it together well.

It was very entertaining and is his latest work.   I intend to read more of his other books to see if this was the full flowering or more par for the course.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - Bernanke in Drag(hi)?

The markets went coo-coo for Cocoa Puffs today as the Fed threw a gallon of vodka into the punchbowl.

The financials were leading the charge. When Citi outdistances AAPL you know its not Kansas that they put on that blotter paper that day.

Is this Ben's Draghi moment? So far the Fed has not made much of a dent in the real economy, just the banks and bonds. And helped some gold bugs feel better about themselves I think.

Part of this is certainly the government's fault, but quite a bit is the Fed's, for their coddling of the Banks with their excess reserves and gambling ways. They are the regulator and a strong voice for policy after all.

A reckoning is coming.

Blythe Masters Appointed to Regulatory Affairs In Addition To Rolling the Dice at JPM

Can a pit boss also be a good casino host?

"Blythe Masters, a widely known figure in the securities industry who oversees JPMorgan's commodities businesses, has been given the additional assignment of running regulatory affairs for the corporate and investment bank under her boss James Staley.

"Having her in this role will be critical to helping us drive the business's strategy in light of changing regulations," Cavanagh and Pinto wrote in the memo.

In her regulatory role, Masters will report to Barry Zubrow, the former chief risk officer who came under the microscope after the bank in early summer reported an expected $6 billion trading loss. Zubrow has been head of the bank's corporate and regulatory affairs office since January."

It appears that Blythe Masters will be dual reporting to James Staley and Barry Zubrow.

Dual reporting is an interesting situation to be in.  It is generally a sign of an unresolved management conflict.

As you may recall, Mr. Zubrow was appointed the head of Regulatory Affairs in January 2012, after the London Whale breeched and then blew up on his watch as Chief Risk Officer, a position now held by a Mr. Hogan.

"John Hogan, who only became chief risk officer in JP Morgan Chase in January, will likely be facing some uncomfortable questions following the bank's revelation yesterday it had made $2bn in trading losses since the beginning of April. Hogan, 46, who previously been head of risk in the investment banking division, replaced Barry Zubrow as chief risk officer for the whole firm in January, when Zubrow took on the newly-created role of head of corporate and regulatory affairs."

Generally people appointed to Regulatory Affairs have some serious background as a regulator. I suspect that as one of the chief risk centers and derivatives jugglers at JPM, Blythe Masters role will be to assess and manage the impact of any government changes in her highly volatile domain. It smells like it could be one of those top down corporate inititatives, generated in response to a crisis and a slide presentation by McKinsey and Company, that look good on flip charts but are useless and awkward in implementation. A trip to Liaison Land.

Or it could be the precursor of a fall from grace.

More change is coming I am sure.

Jamie's Blues

Gold Chart: The 'Cup' Has Formed As Confidence Continues to Erode

"A moment guessed-- then back behind the Fold
Immersed in Darkness, round the Drama rolled
Which, for the pleasure of Eternity,
He doth Himself contrive, enact, behold.

But if in vain, down on the stubborn floor
Of Earth, and up to Heaven's unopening Door,
You gaze Today, while You are You-- what of
Tomorrow, when You will be You, no more?

Omar Khayyám, Rubaiyat

Today's Fed statement confirmed that QE3 is here.

After some initial hesitation the markets shot higher, believing that the Fed would do 'whatever it takes' to bring down real unemployment and to protect the financial markets.

Given that most if not all of the stimulus provided by the Fed has gone to the top percent of the economy's participants, I am struggling with what has changed that will suddenly spread the wealth to the 99 percent. The trickle down theory? Oh please.

He is monetizing the wrong debt for the wrong people in the wrong ways.

Without reform, Bernanke can print until the dollars come home to roost, before he will meet any broad employment targets in this economic structure. Unless the wealthy start hiring people to push their wheelbarrows of money to the stores.

The country needs to find a backbone and act on reform. But like Achilles, it dithers on the beach. For what reasons we may never know for certain, until history has its say.

Gold and silver took off higher like scalded cats. The charts had predicted it but I did not believe it, at least not so quickly. But there it is.

Gold has completed a 'cup' on the daily chart.

Now we would need to see a nice 'handle' to go with it.

There certainly remains the possibility that the 'cup' could fail, and gold could fall back into its broad trading range. That would be manipulation, and it could continue to work for the time being. Modern money is a funny little magician that way. I don't think we have seen anything quite like it, even in some of the more famous manias.

Bonds are the mother of bubbles. But momma swings a big stick.

Here is a look at my 'shadow' chart on gold, that I keep in background to watch developing scenarios without having to engage in unnecessarily tedious redrawing of the published chart.

The 'rim' looks to be around 1770 to 1790.

If this works, the target for this formation would be 2000+ in the next two months or so.

There are larger patterns forming on the chart that call out higher targets.  As to where this ends, it ends when the economy is reformed and the median wage is healthy.

The chart situation in silver is similar, but the percentages are greater. The targets there would be roughly 43, and then 60+. This is by no means a top target.

One step at a time.  In the event of a liquidity panic or exogenous event the charts may defer.